Tesla (TSLA.O) reported that shareholders approved Elon Musk’s $56 billion remuneration plan on June 13, demonstrating the company’s excellent leadership and motivating him to focus on his primary source of revenue.
Many Tesla investors strongly support Musk, so the approval reveals how much they like him. Although large institutional investors and proxy firms opposed the plan, it was approved.
Musk referred to himself as “pathologically optimistic” before taking the stage at the annual shareholder meeting in Austin, Texas. To cheers, Musk remarked that the factory wouldn’t exist wouldn’t, if he wasn’t optimistic. But in the end, I did deliver. That’s the crucial element. He had hinted late on Wednesday that the plans were gaining much traction.
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Though some legal experts believe the fight against the pay package could last for months, the approval does not end the matter. It is still pending in a Delaware court. In January, the judge declared the salary package illegal, calling it “unfathomable.”
Musk may also face fresh lawsuits on the package, the largest in U.S. corporate history. Shareholders voted for this package in 2018.
Brian Quinn, a Boston College Law School professor, said it’s not over. The Delaware judge will scrutinise the vote and require Tesla to prove the process was not coerced or improperly influenced by Musk.
The judge had criticised Tesla’s board as “beholden” to him, saying the plan was proposed by a conflicted board with close personal and financial ties to its top executive.
Shareholders Gain More Control with Reduced Board Terms and Lower Voting Criteria
A plan to relocate the company’s legal headquarters from Delaware to Texas was also approved by shareholders on Thursday. Some other recommendations were also approved, including the re-election of James Murdoch, the son of media magnate Rupert Murdoch, and Musk’s brother, Kimbal Musk, as board members.
Although the board opposed both, proposals to reduce board terms to one year and lower voting criteria for proposals to a simple majority were approved by shareholders, increasing investor control.
The voting counts, which are anticipated to be made public in the next few days, were not disclosed by Tesla on Thursday. Approximately 40,000 people watched the meeting on YouTube, and at least 500,000 watched the video on social networking site X.
Lindsey Stewart, a director at Morningstar Sustainalytics, stated that this conveys that Tesla’s regular investors favour the current situation, and the precise voting percentages will be interesting to observe.
Musk’s Grip on Tesla Tightens Despite Concerns
Tesla CEO Elon Musk and his security detail leave the company’s Washington office, with shareholder approval for compensation indicating Musk’s tenure and investors’ reluctance to risk the company’s future.
Tesla is reducing its dependence on Elon Musk, who threatened to build AI and robotics products outside the company if he didn’t gain enough voting control. He’s shifting Tesla’s focus to robotaxis and reducing mass-market electric cars.
Read also: Elon Musk’s AI Startup secures $6 Billion in funding for expansion
Tesla CEO Elon Musk announced a record 1,300 Cybertrucks shipped in a week and plans for Semi truck production. He discussed autonomous car plans but no launch date. Tesla’s share price dropped 55% from its 2021 peak due to slow EV sales and Musk’s focus on other companies. Shareholders endorsed Musk’s incentive-based contract terms.
Elon Musk and Robyn Denholm’s decision to retain Musk is about CEO loyalty, according to Amalgamated Bank’s chief sustainability office, despite the pressure on Tesla’s board for good governance.
Tesla’s sales and profit have slowed, with Elon Musk adding two more companies since 2018. He now runs or owns six firms, including SpaceX, X, and xAI, raising concerns about his excessive wealth.
